News & Research: Client Successes
Case Study: Transformer Inventory Assessment
ScottMadden worked with an energy transmission cooperative to identify the root causes of transformer inventory growth and identify actions to improve transformer inventory management systems.
- Transformer inventory was growing at an unsustainable level that had both storage and financial implications
- The client exercised an ad hoc process with an already overburdened resource to recoup value from its surplus transformer inventory
- The cost recovery model for both asset and installation costs was not aligned with the company's operational situation
- Financial incentives for individual members of the energy transmission
- The client required an objective third-party assessment of the root causes for transformer inventory growth and recommendations to reduce inventory, while maximizing returns on surplus inventory
- Analyzed historical data to identify trends and forecasted future inventory levels
- Conducted interviews and independent research to identify the root cause(s) of the problem
- Assessed the viability of potential solutions to determine which course of action would yield the largest return
- Conducted market research to gauge the market for used transformers
- Evaluated the business case for implementing a formal investment recovery inventory management system
- Identified root causes for transformer inventory growth: economic life of assets in excess of planning horizon, demand for certain types of transformers decreasing, and load growth forcing upgrades beyond 46kV system capabilities
- Recommended implementing a formal investment recovery inventory management system with an experienced investment recovery specialist. Over time, the scope would expand beyond transformers to include all surplus material
- Recommended process changes and financial incentives to encourage further use of the older transformers
- Recommended further evaluation of the depreciation schedules to fully recover asset and installation costs
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